Measures to preserve jobs and sustain family income

Measures to preserve

jobs and sustain family income

In this general regional context, the COVID-19 coronavirus pandemic erupted in March 2020. Faced with the economic and social crisis this was to cause, several governments in the region adopted measures aimed at sustaining businesses and preserving jobs on the one hand, and compensating for income losses for those households whose members suffered total or partial reductions in their work income on the other. Some countries took such measures very early, anticipating the depth of the looming crisis, while others reacted later. Some extended the measures throughout 2020 and even until the beginning of 2021, while others concentrated the policies on the months in which the decline in economic activity had the greatest social impact. Similarly, the amounts associated with these policies were also variable in accordance with economic needs and budgetary constraints, but also with the political decisions made by each government.

A significant number of the countries made direct state contributions to prevent the breakdown of labor relations. These contributions were based on subsidies on the wage bill and/or on the extension of unemployment insurance to cover situations of suspensions or reductions of working hours.

In this sense, policy comparison shows the differences between the varying models adopted by unemployment insurance or unemployment funds. In those countries associated with individual capitalization accounts such as Chile, Costa Rica, Colombia and Peru, withdrawals made by workers were taken from their accumulated funds, being limited to that availability and, in turn, affecting the possibility of drawing on these in the future. This was not the case for insurance which is not of this type.

Targeting those who lost their jobs, unemployment insurance was also modified and made more flexible in order to cover a higher percentage of the unemployed, with a higher relative income and/or for a longer period of time. But beyond such modifications, this is not a policy with such broad coverage compared to other types of policies implemented, given the low coverage that this type of insurance has since it is linked exclusively to formal salaried employment.

With respect to formal employment, it should be noted that as economic activity recovered, some of the policies initially implemented were modified or finalized and,

instead, others were designed, aiming at the reintegration of workers and an increase in employment.

The high proportion of informality in the labor structure of Latin American countries meant that a highly significant portion of the most vulnerable occupations suffered more greatly during the pandemic. To reach these workers, the policies implemented in various countries were the making of monetary transfers (or those in kind) to families lacking formal income. In many cases, this meant reaching a group of households and populations that were not previously covered by programs of this type, i.e. incorporating a population previously not considered as a subject of public policy.

In relation to this type of policy, some countries, such as Argentina and Brazil, implemented more universal coverage criteria for income support, thereby covering a large part of the population and households with informal workers, while others such as Chile–particularly in the first months–and Paraguay focused on specific groups.

The fiscal effort implicit in the measures taken by countries has been partially measured by CEPAL, based on information up to the month of May, which in some cases was based on announcements. Drawing on this information, heterogeneous situations can be observed. On average, spending on measures announced to face the coronavirus pandemic came to 3.2% of the GDP, with six countries spending above that value, these being: Chile, Peru, Brazil, Paraguay, Argentina and Panama, in descending order. It should also be noted that three of the 14 countries selected spent percentages below 1% of the GDP, these being Uruguay, the Dominican Republic and Costa Rica, while Mexico was very close to that value.